While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
CURRENT POSITIONS:
GOGO Long at $19.93
Total Premium Collected $1.95
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DUST Long $4.50
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SNAP Long at $14.54
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OI Long Feb $19 call @ $1.70
OI Short Feb $22 call @ $0.55
UNIT Long at $19.35
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PHM Long at $22.40
PHM Short Nov 2nd call @ $0.55
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Thankfully, I was not picked to serve on a jury. So, the webinar schedule has not changed.
Yesterday, we added a weekly covered call on PHM. We bought the stock and sold the calls that expire next Friday.
The market had the feel of a flash crash yesterday. After gapping down almost 35 points at the open, the S & P 500 dropped to a low of 2,691.43 before finding some support.
After the low at 10:15 EST, the market spent the rest of the day filling the bearish gap.
The low of the gap was 2,755.66 and the market rallied back to a high of 2,753.59. So, the bounce-back came to fill almost the entire gap.
The market is at key inflection points. The two main ones are the 2,744.10 resistance level and the midband on the daily chart.
The midband is 2,739.17 and the S & P 500 actually traded almost 50 points under the midband.
And by the close, the S & P 500 managed to close just above it by about a point.
This, of course, is a key support level. If it can't hold I would fully expect the market to continue lower.
The lower band would be the logical objective if the midband cannot hold. And that level is 2,486.04.
So, the market could have another downleg of about 255 points, if the midband cannot hold.
A drop to the lower band in the daily chart would be a correction of about 455 points or about 15%.
But, there are major resistance levels that should offer support for this market.
In the short term, the S & P 500 did close under the major 2,744.10 level. And the low was just under the 2,695.30 level.
We can follow the closes under the downside level of 2,731.90 to determine if 2,695.30 level should be tested again.
Having said that, the 2,695.30 should offer strong support. And I would expect a bounce there.
The key level for this market is 2,646.50. This is because if the market does close under this level for two days, it could drop to as low as 2,500, which essentially would be a move to the lower band.
These are longer-term potential moves.
For the short term view, we need to consider that yesterday's close percentage was 79%.
This puts the odds of taking out yesterday's high before the low at almost 80%.
And the resistance level from yesterday's daily bar is in the 2,722 to 2,731 area.
Obviously, you want to watch the 2,739 level.
This afternoon we will get earnings from MSFT.
And tomorrow we will hear from GOOGL, AMZN, CMG, and BIDU.
These reports will be closely followed.
Continue to monitor the levels as I mentioned.
Here are the Key Levels for the Markets:
$VIX:
Major level: 25.00
Minor level: 23.44
Minor level: 20.31
Major level: 18.75 <
Minor level: 17.19
Minor level: 14.06 **
Major level: 12.50
Minor level: 10.94
Minor level: 7.81
Major level: 6.25
The VIX closed at 20.84. The VIX got as high as 24.66 before dropping.
If the VIX can drop, it would signal an end to this pullback.
And the VIX has made a two-level move. If it went three levels, which would be to 31.25, then I would feel that the VIX would continue higher. At this point, 25 should be resistance.
Also, the upper band on the daily chart is 25.77, which is just above the major 25 level.
As I mentioned, both the VIX and the S & P 500 closed lower. Watch this divergence.
Short term resistance is at 23.44. And minor support at 20.31.
SPX:
Minor level: 2,878.40
Minor level: 2,854.00
Major level: 2,841.80
Minor level: 2,829.60
Minor level: 2,805.20
Major level: 2,793.00
Minor level: 2,780.78
Minor level: 2,756.33 ***
Major level: 2,744.10 <
Minor level: 2,731.90
Minor level: 2,707.50
Major level: 2,695.30
At this point, the major 2,695.30 level should offer support. The key for today will be to see if the S & P 500 can reclaim the major 2,744.10 level.
2,708 is the lower band on the 60 minute chart. A retest of this level is possible today. Watch to see if can hold.
QQQ:
Major level: 193.75
Minor level: 192.19
Minor level: 189.06
Major level: 187.50
Minor level: 185.94
Minor level: 182.81
Major level: 181.25
Minor level: 179.69
Minor level: 176.56
Major level: 175.00
Minor level: 173.44
Minor level: 170.31 **
Major level: 168.75
The QQQ closed at 173.27. A close today under 173.44 would suggest a move to 168.75.
But watch for support at 171.88. And the midband on the daily chart, which is 167.82.
The QQQ needs to clear 175 to head higher.
IWM:
Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50
Minor level: 160.94
Minor level: 157.81 **
Major level: 156.25
Minor level: 154.69 **
Minor level: 151.56
Major level: 150.00
The IWM closed at 151.66. The IWM did test 150. It got as low as 148.92 before rallying to close above it.
The midband should now be resistance. That level is 157.91.
The lower band on the 60 minute is 147.81. Technical resistance is at 164.73.
TLT:
Major level: 115.63
Minor level: 115.24
Minor level: 114.45
Major level: 114.06
Minor level: 113.67 **
Minor level: 112.89
Major level: 112.50
The TLT closed at 113.92. The TLT managed to close above 113.67, so it will still need two closes under that level to drop to 112.50.
114.26 and 114.06 should be minor resistance.
GLD:
Major level: 117.19
Minor level: 116.80
Minor level: 116.02 **
Major level: 115.63 <
Minor level: 114.85
Minor level: 113.28
Major level: 112.50
Minor level: 111.72
Minor level: 110.16
Major level: 109.38
The GLD closed at 116.39. Watch to see if the GLD can hold 115.63. If it can't, look for a push down to 113.
I would not expect this bounce to move higher than 118.75. Minor resistance is at 117.19.
Longer term I am looking for a move to 112.50.
XLE:
Major level: 78.13
Minor level: 77.35
Minor level: 75.78
Major level: 75.00
Minor level: 74.22
Minor level: 72.66
Major level: 71.88 **
Minor level: 71.10
Minor level: 69.53
Major level: 68.75 <
The XLE closed at 68.89. The XLE did drop under the 68.75 level but managed to close above it.
Watch to see if the XLE can hold the 68.75 level.
At this point, I would expect resistance at 71.88 and 75.
FXY:
Major level: 85.94
Minor level: 85.75
Minor level: 85.36
Major level: 85.16 <
Minor level: 84.97
Minor level: 84.58 **
Major level: 84.38 <
Minor level: 84.18
Minor level: 83.79
Major level: 83.59
The FXY closed at 85.05. The FXY needs to clear 85.16 to head higher.
If 84.38 can't hold, a test of the recent lows should be the next move.
Minor resistance is at 85.35.
AAPL:
Major level: 231.25
Minor level: 229.69
Minor level: 226.56
Major level: 225.00
Minor level: 223.44
Minor level: 220.31 **
Major level: 218.75 <
Minor level: 217.19
Minor level: 214.06
Major level: 212.50
Apple closed at 222.73. It was up $2.08 on the day, which is a great sign on a bearish day like yesterday.
220.31 should be minor support. And watch 219 intraday for support.
A move up to 225 is likely.
WATCH LIST:
Bullish Stocks: ANTM, CME, LH, AWK, WBA, WBA, LW, PEG, CNK, NYT, DAR, TDS
Bearish Stocks: BIDU, GD, MLM, BABA, IBM, ITW, RHT, RCL, WYNN, SWKS, ALNY, WLK, SINA, CCL, SLB, MNST
Be sure to check earnings release dates.